Apple Inc. plans to debut a smaller, cheaper iPad by year-end, two
people with knowledge of the plans said, to help maintain
dominance of the tablet market as Google Inc. and Microsoft Corp.
prepare competing handheld devices.

The new model will have a screen that’s 7 inches to 8 inches
diagonally, less than the current 9.7-inch version, said the
people, who asked not to be identified because Apple hasn’t made
its plans public. The product, which Apple may announce by
October, won’t have the high-definition screen featured on the
iPad that was released in March, one of the people said.

Here’s the logic behind such a display. Displays aren’t manufactured at their finished size; rather, they’re made on big sheets, and then cut to size. I believe the iPad Mini (or whatever it’s going to be called) uses the same display as the iPhone 3GS. So instead of cutting these sheets into 3.5-inch 480 × 320 displays for the iPhone 3GS, they’ll cut them into 7.85-inch 1024 × 768 displays for the smaller iPad. Same exact display technology, though — display technology that Apple has been producing at scale ever since the original iPhone five years ago. These are displays Apple knows they can produce efficiently and in enormous quantities. All they have to do is cut them into bigger pieces.

And then for developers, the iPad Mini acts just like an iPad 1 or 2: same number of pixels, just a little smaller physically. It’s not a new target.